Chronic proliferative and erosive synovitis, as well as hepatic granulomas, can be induced in susceptible rats by systemic administration of aqueous suspensions of cell wall fragments from selected bacteria, such as group A, B or C streptococci and Lactobacillus casei. The arthritis resembles human rheumatoid arthritis in its clinical, pathological and immunological characteristics. The development of acute and chronic disease is a direct consequence of the deposition and persistence of cell wall fragments in hepatic and synovial tissues. Comparative studies in athymic/euthymic and cyclosporin A treated/control rats have demonstrated that the early acute phases of disease are independent of the thymus and T-lymphocytes; whereas, the chronic phases are thymus-dependent. A striking feature of the chronic disease is a tissue infiltration with lymphocytes; bearing T helper/inducer cell surface markers, as well as markedly enhanced Ia antigen expression. Interestingly, bone and cartilage destruction appears to be mediated by a "transformed" appearing fibroblast-like cell. Available data indicate that "transformation," proliferation, and bone destruction mediated by the fibroblast-like cell is dependent upon T-lymphocyte derived cytokines. The animal model provides a powerful tool to investigate mechanisms that regulate susceptibility to chronic inflammation, as well as mechanisms involved in the production of tissue destruction.